Financial Highlights for the Quarters Ended December 29, 2013 and September 29, 2013

(in thousands, except per share data and percentages)

U.S. GAAP

December 2013

September 2013

Change Q/Q

Revenue

$

1,116,061

$

1,015,059

+10

%

Gross margin as percentage of revenue

43.7

%

42.5

%

+120

bps

Operating margin as percentage of revenue

14.7

%

10.4

%

+430

bps

Diluted EPS

$

0.87

$

0.50

+74

%

Non-GAAP

December 2013

September 2013

Change Q/Q

Revenue

$

1,116,061

$

1,015,059

+10

%

Gross margin as percentage of revenue

45.8

%

45.0

%

+80

bps

Operating margin as percentage of revenue

18.7

%

16.2

%

+250

bps

Diluted EPS

$

1.10

$

0.81

+36

%

GAAP Financial ResultsRevenue for the period was $1,116 million, gross margin was $487.8 million, or 43.7% of revenue, operating expenses were $323.3 million, and net income was $149.0 million, or $0.87 per diluted share on a GAAP basis. This compares to revenue of $1,015 million, gross margin of $431.9 million, or 42.5% of revenue, operating expenses of $326.5 million, and net income of $85.5 million, or $0.50 per diluted share, for the September 2013 quarter.

Non-GAAP Financial ResultsNon-GAAP gross margin was $510.8 million, or 45.8% of revenue, non-GAAP operating expenses were $302.1 million, and non-GAAP net income was $188.7 million, or $1.10 per diluted share. This compares to non-GAAP gross margin of $456.7 million, or 45.0% of revenue, non-GAAP operating expenses of $291.9 million, and non-GAAP net income of $139.2 million, or $0.81 per diluted share, for the September 2013 quarter.

"Calendar 2013 was an extraordinary year for Lam Research, highlighted by strong operating and financial performance. Our December quarter results closed the year with record shipments, record revenues and earnings that exceeded our expectations," stated Martin Anstice, Lam Research's president and chief executive officer. "Our outlook for continued healthy levels of wafer fab equipment spending in 2014 reflects our customers' planned investments in key technology inflections tempered by their focus on maintaining balanced supply and demand. Against this industry back drop, we are further strengthening our emphasis on customer trust and improving competitiveness to reinforce the opportunities for future growth and enhanced financial performance of Lam."

Balance Sheet and Cash Flow ResultsCash and cash equivalents, short-term investments, and restricted cash and investment balances increased to $2.7 billion at the end of the December 2013 quarter compared to $2.6 billion at the end of the September 2013 quarter. This increase was primarily the result of approximately $129 million in cash flows from operating activities during the December 2013 quarter, partially offset by $48 million of stock repurchases.

Deferred revenue and deferred profit balances at the end of the December 2013 quarter increased to $405.0 million and $224.4 million, respectively, as compared to $334.0 million and $188.4 million, respectively, at the end of the September 2013 quarter. Lam's deferred revenue balance does not include shipments to Japanese customers, to whom title does not transfer until customer acceptance. Shipments to Japanese customers are classified as inventory at cost until the time of acceptance. The anticipated future revenue from shipments to Japanese customers was approximately $53.5 million as of December 29, 2013.

Geographic DistributionThe geographic distribution of shipments and revenue during the December 2013 quarter is shown in the following table:

Region

Shipments

Revenue

North America

9%

13%

Europe

7%

5%

Japan

13%

17%

Korea

24%

19%

Taiwan

22%

28%

Asia Pacific

25%

18%

Outlook

For the March 2014 quarter, Lam is providing the following guidance on a non-GAAP basis:

Shipments of approximately $1.250 billion plus or minus $30 million

Revenue of approximately $1.215 billion plus or minus $30 million

Gross margin of approximately 45.0% plus or minus 1.0%

Operating margin as a percent of revenue of approximately 19.5% plus or minus 1.0%

Earnings per share of approximately $1.15 plus or minus $0.05, assuming a diluted share count of 173 million

Use of Non-GAAP Financial ResultsIn addition to U.S. GAAP results, this press release also contains non-GAAP financial results. The Company's non-GAAP results for both the December 2013 and September 2013 quarters exclude costs associated with the fair-value impact of acquisition-related inventory, amortization related to intangible assets acquired in the Novellus transaction, certain integration-related costs, rationalization of certain product configurations, the impairment of a long-lived asset, the amortization of convertible note discounts, and the tax benefit on successful resolution of certain tax matters. Additionally, the December 2013 quarter non-GAAP results exclude the gain on sale of an investment and the September 2013 quarter non-GAAP results excluded certain restructuring charges and the tax expense associated with legal-entity integration.

Management uses non-GAAP gross margin, operating income, operating expenses, operating margin, net income, and net income per diluted share to evaluate the Company's operating and financial results. The Company believes the presentation of non-GAAP results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing the investors' ability to view the Company's results from management's perspective. Tables presenting reconciliations of non-GAAP results to U.S. GAAP results are included at the end of this press release and on the Company's web site at http://investor.lamresearch.com.

Caution Regarding Forward-Looking StatementsStatements made in this press release that are not of historical fact are forward-looking statements and are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, but are not limited to, the anticipated revenue from shipments to Japanese customers, our opportunities for growth, our financial performance, our wafer fab equipment spending outlook, the expected rate of investment in key technology inflections, the success of our strategies for maintaining customer trust and improving competitiveness, the support from our customers, and our guidance for shipments, revenue, gross margin, operating margin, and earnings per share. Some factors that may affect these forward-looking statements include: business conditions in the consumer electronics industry, the semiconductor industry and the overall economy; the strength of the financial performance of our existing and prospective customers; the introduction of new and innovative technologies; the occurrence and pace of technology transitions and conversions; the actions of our competitors, consumers, semiconductor companies and key suppliers and subcontractors; and the success of research and development and sales and marketing programs. These forward-looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed by us with the Securities and Exchange Commission, including specifically our report on Form 10-K for the year ended June 30, 2013 and Form 10-Q for the three months ended September 29, 2013. These uncertainties and changes could cause actual results to vary from expectations. The Company undertakes no obligation to update the information or statements made in this press release.

About Lam ResearchLam Research Corp. (NASDAQ: LRCX) is a trusted global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. Lam's broad portfolio of market-leading etch, deposition, strip, and wafer cleaning solutions help customers achieve success on the wafer by enabling device features that are 1,000 times smaller than a grain of sand, resulting in smaller, faster, and more power-efficient chips. Through collaboration, continuous innovation and delivering on commitments, Lam is transforming atomic-scale engineering and enabling our customers to shape the future of technology. Based in Fremont, Calif., Lam Research is an S&P 500 ® company whose common stock trades on the NASDAQ Global Select Market under the symbol LRCX. For more information, please visit http://www.lamresearch.com .

Consolidated Financial Tables Follow.

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data and percentages)

(unaudited)

Three Months Ended

Six Months Ended

December 29,

September 29,

December 23,

December 29,

December 23,

2013

2013

2012

2013

2012

Revenue

$

1,116,061

$

1,015,059

$

860,886

$

2,131,120

$

1,767,774

Cost of goods sold

628,272

583,201

545,472

1,211,473

1,118,474

Gross margin

487,789

431,858

315,414

919,647

649,300

Gross margin as a percent of revenue

43.7

%

42.5

%

36.6

%

43.2

%

36.7

%

Research and development

174,477

170,567

165,951

345,044

329,262

Selling, general and administrative

148,838

155,883

145,421

304,721

299,284

Total operating expenses

323,315

326,450

311,372

649,765

628,546

Operating income

164,474

105,408

4,042

269,882

20,754

Operating margin as a percent of revenue

14.7

%

10.4

%

0.5

%

12.7

%

1.2

%

Other expense, net

(3,837

)

(14,262

)

(13,390

)

(18,099

)

(23,328

)

Income before income taxes

160,637

91,146

(9,348

)

251,783

(2,574

)

Income tax expense (benefit)

11,645

5,640

(15,756

)

17,285

(11,750

)

Net income

$

148,992

$

85,506

$

6,408

$

234,498

$

9,176

Net income per share:

Basic net income per share

$

0.92

$

0.52

$

0.04

$

1.44

$

0.05

Diluted net income per share

$

0.87

$

0.50

$

0.04

$

1.37

$

0.05

Number of shares used in per share calculations:

Basic

162,305

162,896

170,699

162,603

175,314

Diluted

171,757

171,363

173,027

171,592

177,490

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

December 29,

September 29,

June 30,

2013

2013

2013

(unaudited)

(unaudited)

(1)

ASSETS

Cash and cash equivalents

$

1,132,555

$

1,156,184

$

1,162,473

Short-term investments

1,389,735

1,300,031

1,334,745

Accounts receivable, net

909,720

713,524

602,624

Inventories

661,572

614,790

559,317

Deferred income taxes

17,095

29,090

27,674

Other current assets

138,359

110,633

106,996

Total current assets

4,249,036

3,924,252

3,793,829

Property and equipment, net

546,193

564,845

603,910

Restricted cash and investments

166,395

166,385

166,536

Goodwill and intangible assets

2,453,066

2,484,900

2,526,541

Other assets

141,108

149,963

159,499

Total assets

$

7,555,798

$

7,290,345

$

7,250,315

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

$

1,522,572

$

1,402,890

$

1,404,475

Long-term debt, convertible notes, and capital leases

$

803,276

$

796,373

$

789,256

Income taxes payable

248,996

248,462

246,479

Other long-term liabilities

129,710

129,306

134,313

Total liabilities

2,704,554

2,577,031

2,574,523

Senior convertible notes

185,154

186,042

186,920

Stockholders' equity (2)

4,666,090

4,527,272

4,488,872

Total liabilities and stockholders' equity

$

7,555,798

$

7,290,345

$

7,250,315

(1) Derived from audited financial statements

(2) Common shares issued and outstanding were 162,169 shares as of December 29, 2013, 162,217 shares as of September 29, 2013 and 162,873 shares as of June 30, 2013.

LAM RESEARCH CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Three Months Ended

Six Months Ended

December 29,

September 29,

December 23,

December 29,

December 23,

2013

2013

2012

2013

2012

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

148,992

$

85,506

$

6,408

$

234,498

$

9,176

Adjustments to reconcile net income to net cash provided by operating activities: